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Track Group Reports 2nd Quarter Fiscal 2021 Financial Results

NAPERVILLE, Ill., May 11, 2021 /PRNewswire/ — Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its second quarter ended March 31, 2021 (“Q2 FY21”). In Q2 FY21, the Company posted (i) total revenue of $9.9 million, an increase of approximately 21% over total revenue for the same period last year (“Q2 FY20”); (ii) operating income of $1.7 million, representing an increase of 601% compared to Q2 FY20 operating income of $0.2M; (iii) adjusted EBITDA of $2.9 million in Q2 FY21, up 77% compared to $1.6 million for Q2 FY20; and (iv) net income attributable to common shareholders of $2.2M in Q2 FY21 compared to a net loss of $1.7 million in Q2 FY20.

“Again, we were able to continue the Company’s strong performance over the past twelve months with a record performance for the quarter ended March 31, 2021. So far, we have managed to successfully navigate the challenges brought on by the Coronavirus by working closely with our customers and partners. We are excited about the future and the continued evolution of our technologies to support our customers’ programs in the years ahead.” said Derek Cassell, Track Group’s CEO.

FINANCIAL HIGHLIGHTS

  • Strong quarterly total revenue of $9.9 million in Q2 FY21, up 21% compared to Q2 FY20 total revenue of $8.1 million as the significant increase in monitoring revenue of approximately 22% was offset by a nominal decline in product sales. Revenue for the 6 months ended March 31, 2021 (“6M FY21″) of $19.3 million was up approximately 16% compared to revenue of $16.6 million for the 6 months ended March 31, 2020 (“6M FY20″).
  • Gross profit of $5.4 million in Q2 FY21 was up 23% compared to Q2 FY20 gross profit of $4.4 million. Gross profit for the 6M FY21 was $10.6 million, or up 17% compared to gross profit of $9.1 million for 6M FY20.
  • Total operating expense for Q2 FY21 of $3.8 million was down 10% versus Q2 FY20’s total operating expense of $4.2 million. The decline in quarterly operating expense when combined with the favorable increase in gross profit led to operating income in Q2 FY21 of $1.7 million compared to operating income of $0.2 million for Q2 FY20, representing an improvement of 601%. Similarly, for 6M FY21, operating income was $3.1 million compared to operating income of $0.5 million, representing an increase of 473%.
  • Adjusted EBITDA for the Q2 FY21 was $2.9 million, an increase of nearly 77%, compared to $1.6 million for Q2 FY20. Adjusted EBITDA in Q2 FY21 as a percentage of revenue also increased to 29.1%, compared to 19.9% for Q2 FY20. Adjusted EBITDA for 6M FY21 was $5.5 million compared to the Adjusted EBITDA for 6M FY20 of $3.4 million, representing an improvement of approximately 63%. Similarly, Adjusted EBITDA for the 6M FY21 as a percentage of revenue also increased to 28.7%, compared to 20.5% for the 6M FY20.
  • The cash balance of $6.7 million at March 31, 2021 was down only 1% compared to $6.8 million at September 30, 2020 reflecting significant capital investments made by the Company of approximately $2.7 million in the 6M FY21 to build additional monitoring devices and software to accommodate increased customer demand. Capital investments for the 6M FY21 were up 78% compared to the same period last year.
  • Net income attributable to common shareholders in Q2 FY21 was $2.2 million compared to a net loss of $1.7 million in Q2 FY20, a change principally attributable to the Company’s strong operating performance and the increase in other Income. Net income attributable to common shareholders for the 6M FY21 was $3.5 million, up significantly compared to the net loss of nearly $2.0 million for the 6M FY20.

Business Outlook

As of May 11, 2021, the Coronavirus pandemic has adversely impacted both the Company’s revenue and costs by disrupting its operations in Chile, causing delays within the supply chain and postponing sales opportunities as some government agencies have delayed new RFP (Request for Proposal) processes. We continue to operate and manage around a global semiconductor shortage though adaptive supply chain management strategies. The extent to which the Coronavirus pandemic and semiconductor shortage impact our operations and financial results from this point forward will depend on numerous evolving factors that we cannot accurately predict. Given these uncertainties, the Company has elected not to provide specific guidance regarding fiscal 2021 operating results; however, we are comfortable that the remainder of fiscal 2021 will continue to exceed last year’s results.

About Track Group, Inc.

Track Group designs, manufactures, and markets location tracking devices; as well as develops and sells a variety of related software, services, and accessories, networking solutions, and monitoring applications. The Company’s products and services are designed to empower professionals in security, law enforcement, corrections, and rehabilitation organizations worldwide with single-sourced offender management solutions that integrate reliable intervention technologies to support re-socialization and monitoring initiatives.

The Company currently trades under the ticker symbol “TRCK” on the OTCQX exchange. For more information, visit www.trackgrp.com.

Forward-Looking Statements

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “if”, “should” and “will” and similar expressions as they relate to Track Group, Inc., and subsidiaries (“Track Group”) are intended to identify such forward-looking statements. These statements are only predictions and reflect Track Group’s current beliefs and expectations with respect to future events and are based on assumptions and subject to risks and uncertainties and subject to change at any time. Track Group may from time-to-time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see “Risk Factors” in Track Group’s annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. New risks emerge from time to time. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

Non-GAAP Financial Measures

This release includes financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission including non-GAAP EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures are based on the financial figures for the respective period.

Non-GAAP Adjusted EBITDA excludes items including but not limited to interest, taxes, depreciation, amortization, impairment charges, gains and losses, currency effects, one-time charges or benefits that are not indicative of operations, charges to consolidate, integrate or consider recently acquired businesses, costs of closing facilities, stock based or other non-cash compensation or other stated cash and non-cash charges (the “Adjustments”).

The Company believes the non-GAAP measures provide useful information to both management and investors when factoring in the Adjustments. Specific disclosure regarding the Company’s financial results, including management’s analysis of results from operations and financial condition, are contained in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2020, and other reports filed with the Securities and Exchange Commission. Investors are encouraged to carefully read and consider such disclosure and analysis contained in the Company’s Form 10-K and other reports, including the risk factors contained in such Form 10-K.

TRACK GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS




(Unaudited)

March 31,



September 30,


Assets


2021



2020


Current assets:







Cash


$

6,679,527



$

6,762,099


Accounts receivable, net of allowance for doubtful accounts of $2,616,716 and $2,654,173, respectively



6,720,965




5,546,213


Prepaid expense and deposits



1,120,543




866,389


Inventory, net of reserves of $0 and $6,483, respectively






124,606


Total current assets



14,521,035




13,299,307


Property and equipment, net of accumulated depreciation of $2,822,516 and $2,531,631, respectively



258,243




378,764


Monitoring equipment, net of accumulated depreciation of $5,780,731 and $6,639,883, respectively



2,920,544




2,065,947


Intangible assets, net of accumulated amortization of $17,584,880 and $16,390,721, respectively



21,478,335




21,171,045


Goodwill



8,408,174




8,220,380


Deferred tax asset



401,108




432,721


Other assets



4,393,915




2,166,743


Total assets


$

52,381,354



$

47,734,907











Liabilities and Stockholders’ Equity (Deficit)









Current liabilities:









Accounts payable


$

1,705,807



$

2,199,215


Accrued liabilities



3,657,480




14,958,628


Current portion of long-term debt



516,256




30,914,625


Total current liabilities



5,879,543




48,072,468


Long-term debt, net



43,791,682




418,575


Long-term liabilities



70,539




164,487


Total liabilities



49,741,764




48,655,530











  Commitments and contingencies


















Stockholders’ equity (deficit):









Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,453,790 and 11,414,150 shares outstanding, respectively



1,145




1,141


Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding








Paid in capital



302,270,238




302,270,242


Accumulated deficit



(298,763,208)




(302,270,933)


Accumulated other comprehensive loss



(868,585)




(921,073)


Total equity (deficit)



2,639,590




(920,623)


Total liabilities and stockholders’ equity (deficit)


$

52,381,354



$

47,734,907


 

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)




Three Months Ended



Six Months Ended




March 31,



March 31,



March 31,



March 31,




2021



2020



2021



2020


Revenue:













Monitoring and other related services


$

9,742,290



$

7,993,092



$

19,014,019



$

16,261,515


Product sales and other



119,540




138,634




249,716




291,042


Total revenue



9,861,830




8,131,726




19,263,735




16,552,557



















Cost of revenue:

















Monitoring, products and other related services



3,901,824




3,201,677




7,602,250




6,468,586


Depreciation and amortization included in cost of revenue



525,022




494,157




1,013,697




981,599


Total cost of revenue



4,426,846




3,695,834




8,615,947




7,450,185



















Gross profit



5,434,984




4,435,892




10,647,788




9,102,372



















Operating expense:

















General & administrative



2,313,836




2,723,219




4,714,571




5,735,073


Selling & marketing



614,409




642,432




1,164,866




1,183,981


Research & development



334,569




323,737




641,863




619,892


Depreciation & amortization



510,067




509,287




1,041,830




1,025,226


Total operating expense



3,772,881




4,198,675




7,563,130




8,564,172



















Operating income



1,662,103




237,217




3,084,658




538,200



















Other income (expense):

















Interest expense, net



(565,522)




(596,324)




(1,205,544)




(1,198,857)


Currency exchange rate gain (loss)



124,216




(1,334,240)




942,842




(1,190,932)


Other income (loss), net



1,000,756




(4,347)




1,000,782




(4,347)


Total other income (expense)



559,450




(1,934,911)




738,080




(2,394,136)


Income (loss) before income tax



2,221,553




(1,697,694)




3,822,738




(1,855,936)


Income tax expense



37,322




23,365




315,013




97,748


Net income (loss) attributable to common shareholders



2,184,231




(1,721,059)




3,507,725




(1,953,684)


Foreign currency translation adjustments



(265,347)




132,588




52,489




68,490


Comprehensive income (loss)


$

1,918,884



$

(1,588,471)



$

3,560,214



$

(1,885,194)



















Net income/(loss) per share – basic:

















Net income/(loss) per share


$

0.19



$

(0.15)



$

0.31



$

(0.17)


Weighted average shares outstanding



11,435,291




11,414,150




11,424,605




11,336,690



















Net income/(loss) per share – diluted:

















Net income/(loss) per share


$

0.18



$

(0.15)



$

0.29



$

(0.17)


Weighted average shares outstanding



12,056,918




11,414,150




12,072,079




11,336,690


 

 

TRACK GROUP, INC. AND SUBSIDIARIES

NON-GAAP ADJUSTED EBITDA MARCH 31, 2021 (UNAUDITED)




Three Months Ended

March 31,



Six Months Ended

March 31,




2021



2020



2021



2020















Non-GAAP Adjusted EBITDA













Net income (loss) attributable to common

shareholders


$

2,185



$

(1,721)



$

3,508



$

(1,954)


Interest expense, net



566




596




1,206




1,199


Depreciation and amortization



1,036




1,004




2,056




2,007


Income taxes (1)



37




24




315




98


Board compensation and stock-based compensation



75




75




150




170


Loan forgiveness



(1,001)







(1,001)





Foreign exchange (gain)/loss



(125)




1,334




(943)




1,191


Other charges, net (2)



97




306




233




680


Non GAAP Adjusted EBITDA


$

2,870



$

1,618



$

5,524



$

3,391


Non GAAP Adjusted EBITDA, percent of revenue



29.1

%



19.9

%



28.7

%



20.5

%


















Non-GAAP Basic earnings per share

















Weighted average common shares outstanding



11,435,291




11,414,150




11,424,605




11,336,690


Non-GAAP Basic earnings per share


$

0.25



$

0.14



$

0.48



$

0.30



















Non-GAAP Diluted earnings per share

















Weighted average common shares outstanding



12,056,918




11,414,150




12,072,079




11,336,690


Non-GAAP Diluted earnings per share


$

0.24



$

0.14



$

0.46



$

0.30




(1)

Currently, the Company has significant U.S. tax loss carryforwards that may be used to offset future taxable income, subject to IRS limitations. However, the Company is still subject to certain state, commonwealth, and other foreign based taxes.

(2)

Other charges may include gains or losses and non-recurring accrual adjustments.

                                                         

 

Cision View original content:http://www.prnewswire.com/news-releases/track-group-reports-2nd-quarter-fiscal-2021-financial-results-301289217.html

SOURCE Track Group, Inc.

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Smruti Alinje Bhalerao, Editor, Prittle Prattle News

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